The Forex trade is the best known of all day trading, but it definitely isn’t the only commodity swing trading that occurs. While most people are familiar with the stock markets, many people not involved with trading are not aware of the other markets available to day traders, some which are even more widely traded than the stock market. For example, Forex trade occurs at a rate of over $2 TRILLION per day, many times higher than the volume you will find on Wall Street.
Commodities Markets for Day Trading
Many of the commodities markets are involved in day trading, including futures contracts, options, currencies and stocks. Some of the more popular markets for day trading are:
o Currency markets for Forex trade. (US dollar to British pound, euro to Swiss franc)
o Options contracts on futures.
o Futures based on stock indexes (S&P 500 Emini, NASDAQ 100)
o Futures based on commodities trading (corn, soybeans, crude oil)
If you noticed that the mention of stock trading was limited to index based commodities that is because the US Securities and Exchange Commission has restricted day trading of US stocks. Only day trading on the various indexes is allowed.
Exchanges for Day Trading
There are a number of exchanges throughout the world that allow day trading; some of the better known exchanges for trading commodities include the following:
o The Chicago Mercantile Exchange, best know for the S&P 500 Emini and Forex trade.
o NASDAQ, which specializes in the NASDAQ 100
o The Chicago Board of Trade
o Deutsche Boerse in Europe
o Euronext Paris in France
These exchanges establish their own specifications for the markets and process each trade that is made on their specific markets. Given the high volume of activity that occurs in such commodity investing as the Forex trade, these exchanges perform amazingly well.
It is possible to trade directly with the exchanges such as performing Forex trade with the Chicago Mercantile Exchange. In spite of this, many day traders choose to do online futures trading and other day trading with direct access brokerages. These companies allow the day trader to have access to all of the various exchanges, but this access is made easier because the investor is able to use the same interface for each market. In other words, the setup for Forex trade will look basically the same as the interface for online stock market trading. The common interface allows investors to learn one company’s software and not five or six different packages.
What Markets you will Trade
Deciding on where you will do your commodity trading is dependent on several factors such as your risk capital, your desired commodities, your trading plan, and your general approach to trading. If you’re interested in the Forex trade, you will need different amounts of money, experience and time than someone who is interested in trading stock indexes. For a beginner investing, you might want to start with a market that has low margin requirements, a low tick value, and moves at a slower pace than something like the Forex trade, where the amounts can be high and the pace can be rapid.
No matter which type of day trading interests you, whether it is corn futures or Forex trade, it is important to understand the requirements, including the terminology, exchanges, markets and available brokers. Day trading can be very profitable and if an investor will take the time to follow the necessary steps: performing technical analysis, establishing a trading plan, charting and following the news, he or she can be successful whether trading pork bellies or entering the Forex trade.